Friday, October 28, 2016

New Overtime Rules Will Become Effective in a Month

ALERT: The U.S. Department of Labor's (DOL) new overtime rules become effective in just over a month from now; December 1, 2016. These new rules will make 4.2 million employees previously exempt from overtime, eligible for overtime pay.

Under current overtime rules, employees who meet the criteria for the Executive, Administrative, and Professional (EAP) white-collar exemptions and earn more than $455 per week ($23,660 per year) are exempt from overtime protections of the FLSA (Fair Labor Standards Act). On December 1, 2016, this threshold doubles to $913 per week ($47,476 per year).

Currently, there are 22,5 million workers that are overtime exempt. On December 1, 2016, 4.2 million of these workers will get new overtime protections (or get a pay raise to the new threshold). In some cases, it may be more cost effective to increase salaries to the new threshold than to pay overtime. Contractors should perform that kind of analysis.

Women will benefit more than men. That 4.2 million employees that will become eligible for overtime breaks down to 2.3 million women and 1.9 million men.

Miscalculating overtime pay can result in penalties under the FLSA (and possible State laws). These penalties are not insignificant and will also consume a lot of your time and energy.

Generally, employees can be expected to know their rights. The Department of Labor's Wage and Hour Division collects $120 million every year in back wages owed to employees for overtime violations. In many cases, these recoveries were initiated when employees filed complaints with the Department of Labor.

You can read more about the new overtime rules here.

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